It appears proposals for Missouri counties and municipalities seeking to levy a voter-approved sales tax on recreational marijuana sales may be headed to court proceedings to resolve legal questions on the ability of “stacking” the taxes.

Voter approval of Amendment 3 last fall allows for a 6-percent sales tax on sales and locally, Gasconade County and both the city of Owensville and Hermann will ask for voter approval of separate 3-percent sales taxes. Together, if the taxes are approved in each municipality, the sales tax would amount to a 12-cent tax per dollar purchase.

Missouri’s Department of Revenue weighed in on the issue last week in a letter to counties saying stacking a county sale tax with municipal tax was illegal, according to the amendment’s language. Counties, the DOR said, would only be allowed to collect a tax from sales in an unincorporated area like the Swiss or Drake communities should a dispensary locate in either location.

Although county and municipal taxes won’t be collected until after Oct. 1, several media outlets are reporting their communities are already preparing for a potential legal challenge.

And, in a letter from DOR issued Friday, the plot became murkier.

The DOR letter noted, “Going forward, (DOR) will not advise municipalities or counties regarding the possibility of stacking,” noting the constitutional amendment is too “ambiguous.”

The initial letter from DOR warned, the “…tax collected from a customer is limited to the percentage passed and is based on the location of the recreational marijuana business (facility) and depends on if that facility is in an incorporated or unincorporated area.”

Scenarios presented in the earlier letter from the Department of Revenue included possible tax rates being presented to voters in April of up to the allowable 3 percent.

• Facility located in an incorporated area, only the city/town/village may impose any adult use tax up to 3 percent.

• Facility located in unincorporated area, only the county my collect the tax (up to 3 percent).

Under the first scenario, if both a city and a county receive voter approval in April, only the municipality will collect the sales tax on purchases inside the incorporated city/town/village. The level of taxation is included in the ballot language for both Gasconade County and the city of Owensville. Both will ask for a 3-percent rate.

Hermann city officials added a sales tax question to their April ballot with approval in a meeting the day before candidate and ballot questions were required to be submitted for certification. The Republican’s reporter had originally been told the city would not be seeking aldermen approval for placing the tax on the ballot.

Hermann is the location of the county’s only dispensary — Cannibist — which initially opened as a purchase point for medical marijuana. Employees at the business reported record sales the opening day for recreational purchases there on Feb. 4.

In this scenario presented by the DOR, if the county has a voter-approved tax, but the city does not, then the merchant in an incorporated area will not charge any adult use tax. But, if the facility is in an unincorporated area (Mt. Sterling, Drake or Swiss for example) then whatever tax a county levies by voter approval, that tax would be collect only by the county and will be “distributed to the county only,” according to the DOR memo from the Taxation Division Post.

The letter also specified “this does not apply to any sales tax imposed on the sale of  tangible personal property, only the additional local tax on adult use/recreational marijuana.”

Owensville aldermen approved the city’s tax question by unanimous approval of an ordinance. Gasconade County Commissioner’s approved their 3-percent tax by unanimous resolution.

The letter concludes reminding taxing entities the state will automatically impose a 6-percent sales tax on recreational marijuana purchases.

The city of Gerald will be seeking a 3-percent share of the allowed sales tax as will Franklin County.

Osage County will also be seeking a 3-percent sales tax as will the municipalities of Linn and Meta.

In Maries County, both the county and the city of Vienna will seek a 3-percent sales tax.

Marijuana industry officials note the Amendment 3 language prohibits stacking of taxes. Questions to be answered in court will like center around the legality of the terms “local government” which is defined in law as it pertains to where a marijuana facility is located and “political subdivision” which is not so well defined, according to a story Monday in the St. Louis Post-Dispatch.

The DOR isn’t taking sides, apparently.

In the second letter, the DOR wrote: “At the moment, neither interpretation is absolute. If necessary, courts are tasked with interpreting constitutional language.”

Voters will be asked in April to decide the issue locally. How the issue is resolved remains to be seen.

Maries County Commissioners discussed the issue during a Dec. 22, 2022, session and our sister newspaper the Maries County Advocate shared this exchange about putting the marijuana tax on the ballot:

“This marijuana thing may be a big deal in 10 years,” Eastern District Commissioner Doug Drewel said. “It might not be anything. But if you don’t put it in place now, it won’t be done then.”

“One person plants the tree and another enjoys the shade,” Western District Commissioner Ed Fagre said.

“And if we don’t plant the seed, there’s not going to be much shade,” Drewel said.

(With reporting by Colin Willard of the Maries County Advocate).